Do’s and Don’ts in Secondary market – Investor’s education series

Updated on
Dec 13,2017 - 09:30:55 AM

Do’s and Don’ts in Secondary market: Secondary market is a place where the securities issued in the primary market are bought and sold. It is the stock market where the securities are traded post their issuance in the primary market. The main difference between primary and secondary market is that the trading takes place among the investors in the secondary market while it is between the issuer and investor in the primary market.

Do’s in in Secondary market:

Carefully check various sources of information about the company you would like to invest. Sources such as websites of the companies and stock exchanges, databases of data vendors, business channels and magazines, newspapers etc. help the investors very much to know about the fundamentals, management of the company, latest developments, current performance and recent announcements of the company.

Deal only with brokerage firms that are licensed /registered with the stock exchanges and SEBI

Read and enquire about the brokerage firms before opening a trading account. Compare the commissions charged by different brokers across the market.

Don’ts:

Don’t make any buying/ selling orders without considering the potential risks that are involved in the investment.

Don’t pay any heed to the rumors and tips of your brokers without your own judgment of the issue on the ground.

Don’t get carried away by the sudden surges in the share price of a fundamentally weaker company.

At times, the market sentiments may result in un-anticipated fall in the share prices of fundamentally strong companies. Don’t try to play the momentum.

Don’t hesitate to contact your broker in case of any discrepancies between your instructions and the actual transactions the broker has placed.

Don’t engage in the artificial demands and supplies created in the market. Try to hold the securities for a while rather going to gain from the momentary rise or fall.

Don’t sign blank forms such as delivery instruction slip

Don’t get mislead by the advertisements you see in the media on the recent developments that may be distantly unrealistic given the historical trend in the company’s performance. Don’t make any decisions based on such luring information without cross checking the same with multiple sources.

Don’t reveal the credentials of your online accounts with anyone. In case of any suspicious activity, try to change the password after reviewing the account once.